How To Eliminate Credit Card Debt

Can an individual eliminate credit card debt by declaring bankruptcy? I didn't think you could wipe it out, just get the bill collectors off your back. But, someone told me that it depends on which chapter of bankruptcy you use. The right one WILL eliminate credit card debt. I know someone who has $80,000 in credit card debt and they are trying to do that to get rid of that debt! Is it really possible? Are there any restrictions in doing this. Can you ever get a credit card again if you do it?
If you file bankruptcy to eliminate all debt, do you have to give up ALL of your possessions? Will you have anything left?
This is for a friend of mine (really). They don't own a home. They have 2 cars and some furniture and A 401k plan. Between the two of them they make about $40,000 a year. I don't see how debt consolidation will help them How could they EVER pay off $80,000!?! They had a house but they used up all the equity in it over the years and sold it recently and broke even on the deal, ending up with NOTHING! What a mess! I just didn't think they could wipe out their credit card debt! And, it really isn't fair to the rest of us that pay our bills!

There are a number of factors involved.

A chapter 13 is where you have to pay back some of the debt. How much depends on what your current disposable income is and how much your debts total. There is a fairly complicate formula involved. But this will stop them from filing judgments, garnishments or liens. It freezes interest and late fees. And it protect your property if you own a home or car.

A chapter 7 is called "liquidation" for a reason. You may have to give up most of your property. Therefore, if you have a lot of property along with that 80k in credit card debts, you may have trouble keeping it all.

Also, you must pass a "means test". This was put into place to prevent someone who has a very good job from filing BK and dodging their debts. If you earn (generally) over $45k a year you will not qualify for Chapter 7. Again..there is a complicated formula to figure this out.

There are a lot of bankruptcy lawyers who have a free consultation. If you think it's necessary talk your situation over with them.

2007-08-10 16:49:17 by ol_skater_boy

This is a video explaining how to eliminate credit card debt. UPDATE: Thank you all for the hilarious and off color comments, I have decided to ...

Estimated 6000 debt on high interest credit card....

I work in the credit industry and there are several ways you can go about tackling this. First off, take comfort in the knowledge that $6k is not a lot to owe, but if you don't pay it the right way, it will become a long term problem.

Step one: contact your credit card companies and request that they lower your interest rate. if you have been a good consumer they will most likely lower the rate... if you have not been paying on time and look like a risk, they will put up a fight... no matter what, do not give up on the idea that you can lower your interest rate...

If you have been on time tell them that you are considering obtaining a different card, and unless they can lower the rate you are simply going to transfer your balance to a new card and cancel the account.

If you have been bad at staying on time with your payments - then its time to get current and stay current. After 6 months of being timely with your payments they will lower your APR.


next step is to develop a repayment plan... if you can out $200 per month toward the debt you should be done in under 3 yrs. I would suggest that you set yourself up to pay your bills on line using an auto bill pay system, most banks offer this service free of charge and it is a quick way to have your payments go out. Its also easy to track and manage. Set yourself up to pay every 2 weeks. ($6k means your monthly minimum is probably $120 - $135) try an set it so that you make this payment every time you get paid... the more money you can spare towards the debt the faster it will be paid off.


In the meantime you will also want to set up a household budget to see how much money is coming in and out of every dollar, how many pennies are being committed to bills. Once you know what you have to work with it will be easier to plan out the upcoming months.

If you have a lot of extra cash that you can put toward the debt, make sure that you also set aside a reasonable amount into your savings account (if you have $150 that you can send to your card - send $130 and put $20 into savings)

The reason that you want to put money in savings is that you will begin to build up solvency - meaning that you won't have to rely on credit should some unexpected expense come up... (new tires, emergency repairs, etc)

Finally, once you have paid off the debts, DO NOT STOP PAYING- only change where you are sending the money... what I mean is, put that $150 into your savings account so that you can start building up a bit of a nest egg. Having accessable cash help to further stabilize your finances. Everyone should have at least 6 months worth of living expenses available to them in their savings account.

This is an emergency fund that will prevent you from going back into debt should you lose your job, have to move or encounter a large expense down the road (want to buy a home, etc)

There are several professional services that can help such as Debt Management and Settlement Companies, but if you are responsible and can handle taking 3 hours a month to look over your situation you don't really need them. Always be proactive with your debts, always look for ways to save. With a little patience, self-control and determination you will be out of debt in no time.

Best of luck to you.

2006-11-29 17:09:12 by redheadsmum

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When a card holder uses a credit card, he is borrowing from the credit company. How he eliminate his credit card debt.

You need to take some time and learn about money management. It sounds like an old, worn out line but it is true. Using credit cards can help "balance" your money to some degree but it needs to be used wisely. By balance I mean that it can help you during low points of available cash. For people being paid monthly, credit cards can be a real help.

The only proper way to get out of debt is to pay it off and manage your money better.

2007-01-09 21:04:20 by abby fth

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Ask lenders for agreement to delete this items from your credit report when paying them. I recommend to get such agreement thru credit repair agency, for example this one - creditreport.imess.net

2009-02-14 06:05:31 by Jacqueline B

CCCS is definetely the best way to go. They will review your debt situation and honestly tell you if you are too far gone for Credit Counseling or Debt Settlement and need to consider Chapter 7.

Watch out for the fly-by-night counseling services. Many of them charge exhorbitant maintenence fees to simply hold your money for you.

The best place to start is The National Foundation for Credit Counseling at http://www.nfcc.org. From there, you can find your local CCCS agency.

2006-06-13 00:55:49 by dedee